J.M. Smucker Co. will pay almost $2 billion for Ainsworth Pet Nutrition, a premium pet food company known for its Nutrish brand pitched by Rachael Ray, and will consider selling its baking division that is led by the Pillsbury brand.

Smucker
SJM, +0.59%
announced Wednesday it would pay $1.9 billion in cash for Ainsworth, though an estimated tax benefit of $200 million would push the total outlay down to $1.7 billion, and would use debt to finance the deal.

It expects to eventually save $55 million a year through synergies, and reap EBITDA from the business of $110 million in the first year after it closes, which is expected early in the fiscal year that begins May 1.

Smucker stock fell about 1% in late trading Wednesday after the deal was announced, following a close at $123.70; shares registered little premarket action Thursday.

The company said it is “reviewing strategic options” for its baking business, which could include divesting the business that includes Pillsbury, Hungry Jack and Jim Dandy brands, among others.

“This well-run business has been a solid contributor to our financial performance over the years,” Chief Executive Mark Smucker said in Wednesday’s announcement. “However, our current strategic priorities include an increased emphasis and allocation of resources toward growing our coffee, pet, and snacking food businesses.”

The company expects to complete the strategic review by the end of the first quarter of the new fiscal year. Smucker recently had another acquisition deal fall apart after the Federal Trade Commission filed an administrative complaint about the potential for the company to corner the cooking-oil market.

The stock has declined 5.4% in the past year, as the S&P 500 index
SPX, +1.32%
has gained 10.8%.

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